Thought Leadership

Companies are facing many strategic decisions in the coming years as the healthcare reform provisions phase in. Is your company looking far enough ahead when making health benefit decisions for employees?

PwC's annual Touchstone Survey is one of the most comprehensive studies available on benefit plans offered by US-based employers. PwC conducted the 2010 Survey, the third in the annual series, to uncover and keep track of key trends around benefit program strategy, design and administration. This report provides summary data on medical and prescription drug plan design, costs, COBRA rates, wellness and disease management programs, work-life programs, future healthcare strategies and retirement benefits.

The Community Living Assistance Services and Supports Act ("CLASS Act"), is part of the healthcare reform legislation President Obama signed into law in March 2010. The CLASS Act, which will go into effect on January 1, 2011, will create a public insurance option that offers employees voluntary long term care ("LTC") insurance.

Congress just enacted the most substantial change to the health system since the passage of Medicare. This edition of 10Minutes addresses how agile companies can begin preparations to prosper in a post-reform world. Health reform will eventually affect all employers, regardless of size, or whether they are insured or self-insured.

Key issues in health reform that business leaders should consider include:

• Reforms that revolve around tax changes
• As reforms phase in — how to prepare and respond
• Re-examination of benefits strategies

This HRS Insight discusses some of the more significant aspects of health care reform that pertain to retiree medical benefits, as well as the associated accounting and financial reporting implications. We expect to address additional accounting and financial reporting implications of PPACA in subsequent HRS Insights. Topics will include timing of recognition, reflecting changes resulting from PPACA as a prior service cost or as an actuarial gain or loss, and anticipating future plan amendments.

On Sunday, March 21, the House of Representatives passed the Patient Protection and Affordable Care Act (PPACA), by a vote of 219 to 212. This bill had passed the Senate on Christmas Eve 2009. The House then immediately passed H.R. 4872, the Health Care and Education Reconciliation Act (the "reconciliation bill"), which would amend the PPACA in many respects. PPACA was signed on Tuesday, March 23 by President Obama, and the Senate began debate on the reconciliation bill to amend PPACA shortly thereafter.

After months of uncertainty around the outcome of health care legislation, the House approved on Sunday the Patient Protection and Affordable Care Act (PPACA), originally passed by the Senate last December, as well as a health care tax reconciliation bill (H.R. 4872). President Obama is signing PPACA into law. One of the revenue-raising provisions of PPACA is the elimination of tax deductibility of retiree health care costs to the extent of federal subsidies received by plan sponsors that provide retiree prescription drug benefits equivalent to Medicare Part D coverage. Employers currently receiving the Part D subsidy will be required to make adjustments to deferred tax asset balances on their balance sheet in the period PPACA is signed into law, generally resulting in significant charges to tax expense in the income statement this quarter.